Wealth down, but rebound to record highs underway

What does it all mean?

• While wealth eased in the June quarter, it is poised to have rebounded by as much as 10 per cent given current trends in the sharemarket. Higher wealth and firmer confidence should boost consumer spending in the months ahead.
• While Aussie consumers, businesses and superannuation funds held a high proportion of assets in cash and deposits at the end of June, there are inclinations that they are starting to take on ‘riskier’ assets. More cash will be put to work in shares and property in 2014.

What do the figures show?

Financial Accounts:

• Households held a record $774 billion in cash and deposits at the end of June. Cash and deposit holdings represented 22 per cent of assets, above the decade average of 20 per cent.
• Pension fund (superannuation fund) assets rose by $36.5 billion to $1515.8 billion in the June quarter. Cash and deposits stood at 15.3 per cent of financial assets, well above the long-term average of 8.8 per cent.
• The net financial wealth of Australian households (assets less liabilities) fell by $19.9 billion or 1.1 per cent from record highs to $1,747.8 billion in the June quarter. Assets rose by $8.1 billion but debt rose by $28.1 billion in the quarter
• Net financial wealth per capita fell from $76,748 to $75,509 in the June quarter. Per capita wealth is up 12.4 per cent over the past year and up 18.0 per cent over the past three years. Over the past decade per capita wealth is up 93.7 per cent.

Demographic Statistics

• Australia’s population grew by 1.76 per cent over the year to March 2013, down from 1.77 per cent in the year to December. Australia’s population stood at 22,032,746 people at the end of March.
• In the year to March, 308,700 babies were born, down from a record 310,500 births in the year to September, but up 1.3 per cent over the year. The number of deaths stood at 149,600 over the year to March, up 1.6 per cent over the year. Overseas migration totalled 238,300 over the year to March, the biggest annual total in three years, but below the record high of 315,700 in the year to December 2008.
• Across the states and territories, fastest annual population growth occurred in Western Australia (3.42 per cent – the second quarter of slower annual growth), followed by ACT (2.17 per cent), Queensland (2.03 per cent), , Victoria (1.82 per cent), Northern Territory (1.76 per cent), NSW (1.27 per cent), South Australia (0.90 per cent) and Tasmania (0.11 per cent). Population exceeds the decade average in all states except Queensland, South Australia and Tasmania.

Job vacancies:

• According to the Bureau of Statistics job vacancies rose by 3.2 per cent in the three months to August after falling by 7.3 per cent in the three months to May and sliding 10.1 per cent in the three months to February.
• In unadjusted terms in the August quarter, vacancies rose in the South Australia (up 25.0 per cent), NSW (up by 23.2 per cent), Northern Territory (up 12.5 per cent), Tasmania (up 5.9 per cent. Vacancies fell in Western Australia (down 10.3 per cent); Victoria (down 7.7 per cent); Queensland (down 3.7 per cent); and ACT (down 3.6 per cent).
  • The Australian Bureau of Statistics releases the Financial Accounts publication each quarter. The data covers assets, liabilities and financial flows for the key sectors of the economy. Figures on financial wealth help reveal the true state of household finances.
  • Demographic Statistics are issued by the Bureau of Statistics each quarter. The figures include estimates of births, deaths, in-bound and out-bound migration movements and estimates of population change by State.
  • The Bureau of Statistics’ Job Vacancies publication is released every three months and provides a perspective on the strength of the job market, especially hiring by businesses.
  • The Reserve Bank pointed out in the latest Financial Stability Review that household wealth rebounded in recent months. The lift in home and share prices give the Reserve Bank confidence that spending will rebound in coming months.
  • Australia’s firm population growth underlines the fact that more infrastructure will be needed in coming years – both economic and social infrastructure.
  • Super funds and households are still holding much higher than normal levels in cash. CommSec expects that money to be put to work in equities, leading to further gains in share markets in coming quarters. CommSec expects the ASX200 to reach 5600 by mid 2014.

What is the importance of the economic data?

• The Australian Bureau of Statistics releases the Financial Accounts publication each quarter. The data covers assets, liabilities and financial flows for the key sectors of the economy. Figures on financial wealth help reveal the true state of household finances.
• Demographic Statistics are issued by the Bureau of Statistics each quarter. The figures include estimates of births, deaths, in-bound and out-bound migration movements and estimates of population change by State.
• The Bureau of Statistics’ Job Vacancies publication is released every three months and provides a perspective on the strength of the job market, especially hiring by businesses.

What are the implications for interest rates and investors?

• The Reserve Bank pointed out in the latest Financial Stability Review that household wealth rebounded in recent months. The lift in home and share prices give the Reserve Bank confidence that spending will rebound in coming months.
• Australia’s firm population growth underlines the fact that more infrastructure will be needed in coming years – both economic and social infrastructure.
• Super funds and households are still holding much higher than normal levels in cash. CommSec expects that money to be put to work in equities, leading to further gains in share markets in coming quarters. CommSec expects the ASX200 to reach 5600 by mid 2014.